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They're Worth It

Cutting costs is a good idea if it means getting spending under control so you'll have more money to pay down debt, build savings, or achieve other financial goals. But cost-cutting efforts can backfire if you opt to pinch pennies on the wrong things.

Cutting costs is a good idea if it means getting spending under control so you'll have more money to pay down debt, build savings, or achieve other financial goals. But cost-cutting efforts can backfire if you opt to pinch pennies on the wrong things.

Some products and services are worth paying a little more for because the cheaper alternatives could cost you additional cash in the long run.

Auto insurance. Opting for only the minimum amount of coverage required by the state might make it cheaper to own a car, but if you get in an accident, you could end up forking over a lot of cash.

"Paying for car insurance isn't exactly something that people enjoy, but skimping on your policy can really cost you down the road," said Neil Richardson, a contributing expert at the car-insurance comparison marketplace the Zebra (www.thezebra.com).

For example, if you live in Texas and have just the minimum coverage for $25,000 in property damage but total someone's new truck that's worth $50,000, you could be on the hook for the difference, Richardson said. He recommends adding comprehensive and collision coverage (if your vehicle hasn't depreciated significantly), uninsured motorist coverage, and ample liability coverage.

"More complete coverage does not have to be more expensive," said Chris Long, founder of Longevity Insurance Brokers in Denver. You can keep costs down by getting a discount for bundling multiple policies, such as auto and home insurance, with one company. He also recommends asking about discounts for factors such as a good driving record or good grades for teen drivers.

Car repairs. Do research before buying any parts for your car, to ensure you get the right type for your vehicle, said Nicole Firebaugh, manager of Preventative Maintenance Repair in Marion, Ill.

"Putting the wrong types of materials in your vehicle can cause parts to go bad quicker or cause damage to other parts," she said.

Also, check out the warranty on any product you purchase. "It might be an extra $50 to have five more years of a warranty, but that is five more years your part is covered," she said. "Just be sure that you research what the warranty actually entails, so that you do not get in even more trouble down the road."

Finally, don't avoid going to a mechanic just to save money.

"Even if you have seen the YouTube video or gotten advice from your local auto store expert, some things are better left to the expert," Firebaugh said. Many mechanics will provide a warranty for parts and labor, so you're covered if anything goes wrong.

Homeowners insurance. Skimping on this can leave you financially unable to repair the damage from a natural disaster. Standard homeowners insurance doesn't cover flood damage; that has to be purchased through the National Flood Insurance Program.

Nationwide, just 12 percent of homeowners have flood-insurance policies, according to a 2016 survey by the Insurance Information Institute. On average, flood insurance costs about $700 a year, according to the Federal Emergency Management Agency. That might seem like a lot, but it's a fraction of the average paid flood claim, which is $31,000. If you don't live in a high-risk area, you could get coverage for as little as $137 a year, FEMA says.

Standard homeowner policies also don't provide coverage for disasters such as earthquakes, mudslides, and sinkholes, according to the Insurance Information Institute. You might be able to add a separate policy to cover such events.

Home repairs. Don't skimp on anything related to leaking water and water damage, said Justin Pritchard, a financial planner and personal-finance writer.

"Water can cause rot and mold, and fixing those problems gets expensive," said Pritchard. "In addition to fixing whatever gets damaged by water, you'll need to replace drywall, repaint, and pay other finishing costs." If you ignore the problems, it could be hard to sell your home down the line.

To keep costs down, Pritchard recommends asking the contractor what tasks you can tackle in advance, so he doesn't have to charge for time spent doing things other than fixing the problem. Also, consider buying high-quality materials for your contractor, he said. It might cost more up front, but you don't want to use substandard materials that will have to be replaced soon.